"It'll be very competitive and the organisations that can argue their case the best, will certainly do well," out-going CEO of Cobram District Health and in-coming CEO of East Grampians Health Service, Nick Bush said.

Mr Bush said smaller hospitals will have to get organised if they are to compete for the funds.

"A lot of the larger places have strong academic backgrounds and research capacity to write these submissions.. so it does put pressure on smaller places."

"Historically it has been small hospitals that have done poorly out of this type of submission, because they have less capacity to do the research type submissions," he said.

Funds will be allocated according to the government's health reform agenda, prioritising areas such as acute, primary and community care, workforce training, cancer care, research facilities and e-health.

"The area I think would be the biggest for Victorian hospitals is around the workforce training in rural locations."